OTR, proposed FOM rule highlight NCUA Nov. 19 agenda

The board will also consider operating budgets for both 2016 and 2017, federal credit union operating fees, the agency’s corporate stabilization fund oversight budget for those two years, and its annual performance plan for the two-year period.

A legal analysis commissioned by NASCUS and released in June concluded the overhead transfer rate (OTR) is subject to public notice and comment requirements under the Administrative Procedure Act (APA). The 29-page analysis was the first to link the OTR to the notice and comment requirements. The analysis notes that an APA-compliant notice and comment process would require the NCUA Board to explain and demonstrate the reasonableness of and the methodology the board uses to calculate the OTR.

NASCUS has consistently questioned NCUA's calculation of the OTR. Since 1986, the rate has mostly fluctuated around 50% to 60% of NCUA's annual budget. But, in recent years, it has grown dramatically, accounting in 2015 for 71.8% of the agency's total budget.

In late August, Chairman Debbie Matz announced that the NCUA Board would vote in January on publishing the OTR in the Federal Register and ask for public comment. That action would affect the 2017 OTR.

Also in next week’s meeting, the board will consider a proposed rule on field of membership, which has been in the works for some time. According to NCUA Board Vice Chairman Rick Metsger, speaking last month at the NASCUS 2015 State System Summit in New Orleans, the proposed rule is designed to place more control of a credit union’s FOM with its board of directors to deal with local marketplace challenges. He noted that the focus of the proposal will be to give credit unions a menu of options for determining their FOMs. The menu approach, he said, is intended to give credit unions choices that best fit their own needs.

In a follow-up panel discussion at the Summit (featuring state and federal regulators, a legal expert and Metsger himself), the NCUA Board vice chairman explained that the choices would entail “a lot of different things to look at which would fit credit unions and their strategic needs.”

For example, one approach would be to grant credit unions an FOM that is based on their congressional district – which, in a limited number of states, covers the entire state, said at the Summit meeting.

The board meeting gets underway Nov. 19 at 10 a.m. ET in the agency’s Alexandria, Va. headquarters. In addition, the Nov. 19 open meeting will be streamed live; a video of the Oct. 15 open meeting is available online.